Procter & Gamble Co. is merging its global feminine products and baby care units and naming a new executive to oversee its regionally focused market development organizations worldwide, including North America.
Though the moves follow the recent P&G stock tumble caused by a 28% decline in third-quarter earnings, a spokeswoman said they're part of an anticipated evolution in the company's Organization 2005 restructuring. Executives familiar with the company, however, believe the appointment of Kerry Clark, 48, as president-global market development organizations could be a move to bring P&G's regional marketing and sales efforts under firmer control.
P&G Chairman-CEO Durk Jager billed the company's 6% sales growth for its fiscal third quarter ended March 31 as strong, but it was below the 7% to 8% rate projected a month earlier, and about 3 percentage points of the growth came from last year's acquisitions of Iams pet food and Pur water filtration systems.
P&G also said last month it would rely on tax benefits and cash from brand divestitures to hit earnings targets for the current quarter.
Mr. Clark, the youngest of seven presidents of P&G's global business units (heading Global Feminine Care and Asia, based in Kobe, Japan), is seen by analysts and former executives as a protege of Mr. Jager who could someday move up to CEO.
"He's a bit of a tough guy in approach," one former executive said, "and because of all the recent misses on Wall Street, they may need a more disciplined approach to delivering the numbers." The appointment of a key executive like Mr. Clark to head the MDOs could also be a signal to marketing directors and brand managers that an assignment there "isn't Siberia," he added.
RETURN TO CINCINNATI
Mr. Clark will return to P&G's Cincinnati headquarters in his new role.
Steve David, senior VP, who formerly headed P&G's sales organ-ization as global business development officer, was named chief information officer and global business-to-business officer. In that position, he'll oversee P&G's efforts to build online exchanges and other electronic links with suppliers and retailers.
Mr. David's duties, however, don't include media buying or agency relations, which continue to be handled by Global Marketing Officer Robert Wehling.
Mr. Clark takes on Mr. David's sales duties as well as overseeing MDOs. The MDOs include P&G's sales teams, brand managers and marketing directors, who are responsible for everything from local multibrand promotions to Hispanic and African-American marketing.
"You've got a heavyweight going out to handle the Internet, and you've got a heavyweight in to handle the MDOs," said Ken Harris, a consultant with Cannondale Associates. "There's a real feeling that the stunning results of a few weeks ago are not going to stand."
As part of P&G's latest move, executives who had dual roles heading global business units and regional MDOs will now shed those duties. A.G. Lafley, president-global beauty care, will no longer oversee the North American market. Likewise, Geneva-based Wolfgang Berndt, president of P&G's homecare business, and Jorge Montoya, Caracas-based president of P&G's food and beverage business, will no longer be in charge of the Western Europe and Latin American markets.
Feminine care was P&G's smallest global business unit--and getting smaller by the quarter--at least in terms of sales, during Mr. Clark's tenure of less than a year at the helm. It's now paired with the global baby care unit, headed by President Mark Ketchum, which has also seen sales slide in the past year.
REVAMP MAKES SENSE
The P&G spokeswoman said Mr. Clark's move had nothing to do with performance of the feminine products business and that merging it with baby care makes sense because the two product categories share technologies.
"This is part of our longer-term Organization 2005 plan to really optimize our market development organizations," she said, "and Kerry was definitely in a position to be able to lead our MDOs very effectively. MDOs are part of what we consider our competitive advantage in this new structure."
Copyright May 2000, Crain Communications Inc.